Friday, January 16, 2009

Natural Gas Prices Have Fallen By 54% Since June

It's not just oil and gasoline prices that have been plunging since last summer. The December natural gas price ($5.81 per million BTUs) was less than half of the June price of $12.69 (see chart above). The 54% drop from the June 2008 peak brings natural gas prices to the lowest levels since 2006.

Yeah, this doesn't mean anything to consumers until it is actually reflected in their monthly bills from their power company - which it is not doing. I read that that is because the gas we are now "using" was purchased when the prices were high. So, of course, power companies want to sustain their margin of profit on everything they buy and resell. Theoretically, consumers are supposed to see the reduced cost reflected in power bills months from now. . . . It will be interesting to see if that ever actually happens.

I am dumbfounded about nat gas in the nation's energy dependence issue.We've have unlimited reserves, a decent infrastructure, etc. It is clean, it results in to money being sent to MidEast terrorist supporters, would help the balance of trade (by not importing oil), puts us in a much stronger geopolitical position--AND now it is cheap. why is the US not moving at Manhattan Project speed to convert the entire nation to NG???I realize some powerful majors may not be positioned well in NG but this is absurd.

We are about to spend a fortune on wind, sun, tide, biofuels, hydrogen, etc. when a real solution seems to be staring in the face.

I MUST be wrong--someone pls take me out of my misery and explain this.

>Inflation won't arrive until demand picks up.<The value of the dollar is strictly dependent on its scarcity. We are in deflation! We are in cash contraction! That is why all these prices are coming down, starting with the property values. With low interest rates that the Fed has, in their "wisdom", deemed helpful to this situation, the local bank can't take any chances with their loans, and so money will not circulate like before.

>The political question is why isn't the strategic oil reserve being filled with $40/bbl oil?<The problem is that private reserves that have been held are being forced into liquidation by the contraction of money. That is why the price has plummeted. You seem to be calling for a bailout package for the oil companies.

Until and unless you learn the actual content of Austrian economics, you will continue to misunderstand -- and consequently misrepresent -- Austrian economic theory, even as everything it predicts unfolds exactly as predicted right in front of you.